The Hindu Business Line : Govt may allow FDI in sector-specific retail trade

After allowing foreign direct investment up to 51 per cent in brand-specific retail trading, the Government is now considering to allow FDI in sector-specific retail trade.

The Minister for Commerce and Industries, Mr Kamal Nath, told newspersonsthat the Government was looking at allowing FDI in retail areas such as sports goods, stationery, construction material and electronics in a manner that do not affect small and neighbourhood shop owners.

The Ministry is currently engaged in preparing a Cabinet note featuring details of the modalities and the percentage of foreign equity that could be permissible in sector-specific retail trading.

The proposal is likely to be sent for Cabinet consideration next month, informed sources said.

However, like in the case of single brand retail, all FDI proposals for sector-specific retail too would need the approval from the Foreign Investment Promotion Board (FIPB) and would be taken up on a case-by-case basis, sources indicated.

The Minister also said that the Government wants to encourage foreign investment in back-end of retail activities such as logistics management, cold chain and technology so that it even helps the traditional domestic retailers.

The Minister informed that FDI inflows in the first nine months of the current fiscal grew by 134 per cent to $6.1 billion and would cross $11 billion by March 2007 and added that most of this was first-mile investment and much more would follow.

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